Saudi Shares Drop to One-Month Low on Oil Price, Slow Recovery

Saudi Arabian shares declined to a one-month low, led by petrochemical companies and banks, after oil prices and European markets retreated this week as U.S. economic reports heightened investor concern that the global recovery may be faltering.

The Tadawul All Share Index fell 0.5 percent to 6,090.22, the lowest since July 21, at the 3:30 p.m. close in Riyadh. Saudi Basic Industries Corp., the world’s largest petrochemicals maker, known as Sabic, retreated to a seven-week low after oil prices dropped $1.93 in the past week.

“The corrective mode is due to global growth jitters that is the dominant guiding force now for the Saudi stock market,” said John Sfakianakis, chief economist at Banque Saudi Fransi in Riyadh. “It’s very little to do with seasonality and the Ramadan effect.”

European and U.S. stocks declined this week, as reports showed U.S. jobless-benefit claims climbed to the highest level in nine months and Japan’s economy grew at the slowest pace in three quarters. The benchmark Stoxx Europe 600 Index fell 1.3 percent, the biggest drop since July 2. The Standard & Poor’s 500 Index declined 0.7 percent.

Crude oil fell to a six-week low, settling at $73.46 a barrel on the New York Mercantile Exchange yesterday. Futures fell 2.6 percent this week. Saudi Arabia holds one-fifth of the world’s proven oil reserves.

Sabic, Samba

Sabic declined 1.2 percent to 84.5 riyals, the lowest since July 5. Its Saudi Kayan Petrochemical Co. unit dropped 1.5 percent to 16.45 riyals, the lowest since May 25. Riyad Bank, the kingdom’s third-largest lender by market value, tumbled to a seven-month low, dropping 1.1 percent. The shares closed at 26 riyals. Saudi British Bank declined 2.1 percent to 42.6 riyals, the lowest since July 14.

Zain Saudi Arabia, a unit of Kuwait’s biggest mobile-phone company, rose 3.1 percent to 8.3 riyals after the Riyadh-based company announced it’s seeking investor approval to reduce its capital by 48 percent, then raise it by 60 percent to absorb accumulated losses.

Trading volume on the 11th day of Ramadan, the Islamic holy month when Muslims fast from sunrise to sunset and business slows, was lower than the year’s daily average. About 107 million shares traded, compared with this year’s daily average of 146 million.

Tadawul has retreated 12.1 percent from this year’s high in April on fewer better-than-expected corporate results and the gradual pace of the global economic recovery.

Saudi Arabia’s index is the only Gulf Arab benchmark tracked by Bloomberg that trades on a Saturday.